Two of the oldest and still independent mobile ad networks plan to become one. Millennial Media has acquired its older and smaller competitor, Jumptap, for as much as $225 million.

Paul Palmieri, president and chief executive at Millennial Media, cited several strategic and complementary benefits from the combination by highlighting Jumptap’s strengths. “Where Millennial is known as the leader in mobile brand advertising, Jumptap has more of a focus on the performance advertising side of the business,” he says on the company’s earnings call following the announcement.

“Jumptap is the leader in mobile real-time bidding, or RTB, capabilities, reporting that they are seeing over two billion impressions per day to deliver app, download, and other performance campaigns. We’re excited and look forward to adding Jumptap’s performance advertising and programmatic capabilities to the mix at Millennial Media,” Palmieri adds.

Jumptap’s partnerships with third-party data providers will also complement Millennial’s first-party data assets, he says. “We believe that the combination and integration of our first-party data and Jumptap’s aggregation strategy around third-party data, will quickly give us a much better data asset and will drive even better audiences and results for both brand and performance advertisers, while continuing to respect and protect consumers’ privacy.”

Citing data from IDC, Palmieri says “Millennial and Jumptap combined would have accounted for 28.7 percent of the industry last year, about on par with Google’s share.”

The acquisition of Jumptap comes 15 months after Millennial Media went public, and follows Jumptap’s rumored plans to make an initial public offering of its own last year as well. Founded two years before Millennial Media in 2004, Jumptap raised a total of $122 million in funding, including $27.5 million last month.

The all-stock deal includes 24.6 million shares of Millennial Media, which translates to a 22.5 percent stake in the company based on last Friday’s closing price of $9.11. Wall Street hasn’t taken too kindly to the consolidation however, as Millennial’s stock is down more than 17 percent today, hovering around $7 per share. Overall, the acquisition price reflects more than four times Jumptap’s $53 million in advertising revenue last year, which falls in line for the average revenue multiple that mobile firms command at the time of acquisition over the last decade.

“There are too many mobile advertising companies. I think it’s a sign of healthy consolidation,” says John Fletcher, senior analyst at SNL Kagan.

“The publishers are growing revenue a lot faster than the networks,” he tells ClickZ. “There’s one-stop shops you can make now on Facebook or Twitter or elsewhere. When you’re a big media company buying a mobile spot, chances are that big media company executive doesn’t know about Millennial Media and Jumptap, but chances are they know about Facebook and Twitter. So it’s just an easier way for them to go mobile.”

Jumptap Chief Executive George Bell joined Millennial’s earnings call to share his thoughts on the deal and reflect on the company’s deliberately alternative strategy over the last 18 months. “Where Millennial became strong in SDK (software development kit) penetration to app developers, we went after real-time bidding to expand our access to inventory. Where Millennial was strong in brand, we went after performance. Where Millennial was strong in first-party data, we built out third-party data through technology and partnerships,” he says.

“As Millennial expanded internationally, we focused more at home on innovations such as targeting audiences across screens. And seeing that our IP was potentially a differentiator, we pressed our advantage by aggressively adding to our portfolio,” he says. “Now we bring all of this together, bringing solutions that had been born as competition, but more importantly, tested by the market.”

Millennial Media reported a net income loss of $3.1 million last quarter on $57 million in revenue. Revenues jumped 31 percent year-over-year while losses also grew 30 percent over the same period.